Carbon Energy Ltd has produced commercially viable gas from its underground coal gasification (UCG) demonstration plant in south east Queensland.
UCG is the process of extracting coal from the ground through its transformation into a combustible gas for power generation, or as a feedstock in the production of diesel, fertilisers or chemicals.
Carbon Energy, formerly Metex Resources Ltd, said on Tuesday the plant had produced gas suitable for the production of chemicals such as ammonia, petrochemicals-liquids and methanol.
"To date, we have gasified upwards of 70 tonnes of coal per day on air only and the quality of the gas produced continues to be at the top end of our expectations," Carbon Energy managing director Andrew Dash said in a statement.
Carbon Energy shares gained 2.5 cents, or 8.33 per cent, to close at 32.5 cents.
The company said it expected to increase the quantity of coal gasified per day to about 150 tonnes over the coming weeks.
Carbon Energy said it intended to pursue the feasibility of constructing a large-scale manufacturing facility, with existing business partners, once the trial was completed.
The success of Carbon Energy follows on from Linc Energy Ltd, which produced its first product from its gas-to-liquids (GTL) demonstration plant in Queensland last year.
Linc also is using the UCG process to produce diesel from its pilot plant in Chinchilla.
